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PRESS RELEASE
L.B. Foster Company
415 Holiday Drive, Pittsburgh, PA 15220
Contact: David J. Russo
Phone: (412) 928-3417
FAX: (412) 928-7891
Email: investors@LBFosterCo.com
FOR IMMEDIATE RELEASE
L.B. FOSTER REPORTS RECORD SECOND QUARTER
OPERATING RESULTS
PITTSBURGH, PA, July 24, 2008 - L.B. Foster Company (NASDAQ: FSTR), a leading
manufacturer, fabricator, and distributor of products and services for rail,
construction, energy and utility markets, today reported that its second quarter
earnings per diluted share from continuing operations were $0.69 compared to
$0.63 in last year's second quarter, a 9.5% increase. This represents record
second quarter earnings for the Company and marks the fourteenth consecutive
quarter the Company has recorded an earnings increase over the prior year
quarter.
2008 Second Quarter Results
In the second quarter of 2008, L.B. Foster had income from continuing operations
of $7.7 million or $0.69 per diluted share compared to income from continuing
operations of $6.8 million or $0.63 per diluted share in the second quarter of
2007.
Net sales decreased 12.6% to $129.8 million compared to $148.5 million in the
prior year quarter. Gross profit margin was 16.9%, up 255 basis points from the
prior year quarter primarily as a result of increased billing margins and
decreased unfavorable manufacturing variances partially offset by increased LIFO
expense. Second quarter LIFO expense was approximately $2.5 million compared to
$0.7 million in the prior year.
Selling and administrative expenses increased $0.2 million or 1.7% over last
year's quarter due primarily to increased employee related costs including
salaries and benefits. Second quarter interest expense was $0.5 million, a 59%
decrease from the prior year quarter due principally to decreased average
borrowings as the Company generated strong positive cash flows in the second
half of 2007. The Company also generated $0.6 million of investment income in
the second quarter of 2008. The Company's income tax rate from continuing
operations was 37.0% in the second quarter compared to 35.5% in the prior year
quarter.
"Despite sales declining by 12.6%, we are pleased with many facets of our second
quarter results including more than a 250 basis point increase in gross profit
margins; a very strong bookings quarter totaling $164.1 million; backlog has
improved dramatically from the first quarter and is now at $192.2 million, up 7%
over last year; improved plant and yard efficiencies and positive cash flow from
operations even in the face of rapidly escalating commodity costs," commented
Stan Hasselbusch, President and Chief Executive Officer. "We believe that the
improved margin trend and our stronger backlog will have a favorable impact on
our second half operating results." Mr. Hasselbusch also announced, "L.B. Foster
purchased 413,362 shares of its stock in the open market during the second
quarter for approximately $13.8 million pursuant to a recently announced share
repurchase program authorized by our Board of Directors."
2008 Half Year Results
For the six months ended June 30, 2008, L.B. Foster reported income from
continuing operations of $14.0 million or $1.26 per diluted share. These results
include a first quarter pretax gain related to additional proceeds from a
favorable working capital adjustment pursuant to the prior year sale of the
Company's investment in the DM&E Railroad of $2.0 million, as well as a pretax
gain on the sale and lease-back of our threaded products facility in Houston,
Texas. Excluding these gains, earnings per diluted share from continuing
operations were $1.06 compared to $0.91 last year.
Net sales for the first half of 2008 decreased 13.9% to $223.3 million compared
to $259.2 million in 2007. Gross profit margin was 16.8%, up 310 basis points
from 2007, primarily as a result of increased billing margins and decreased
unfavorable manufacturing variances.
Selling and administrative expenses increased $1.1 million or 6% over the prior
year due primarily to employee related costs including salaries and benefits.
Interest expense decreased $1.4 million from the prior year due principally to
decreased average borrowings. The Company's income tax rate from continuing
operations was 36.6% compared to 35.6% in the prior year.
Cash provided from operations was approximately $6.3 million for the second
quarter of 2008 compared to a $12.4 million in the second quarter of 2007.
Capital expenditures were $1.0 million in 2008 compared to $1.3 million during
the prior year quarter. Year-to-date capital expenditures were $3.1 million,
$0.4 million higher than 2007. "We continue to expect to generate positive cash
flows from operations in excess of our capital expenditures in 2008," noted Mr.
Hasselbusch as he concluded, "We continue to undertake initiatives across the
organization to improve our core businesses while we target synergistic and
accretive acquisitions."
L.B. Foster Company will conduct a conference call and webcast to discuss its
second quarter 2008 operating results and general market activity and business
conditions on Thursday, July 24, 2008 at 1:00pm ET. The call will be hosted by
Mr. Stan Hasselbusch, President and Chief Executive Officer. Listen via audio on
the L.B. Foster web site: www.lbfoster.com, by accessing the Investor Relations
page.
The Company wishes to caution readers that various factors could cause the
actual results of the Company to differ materially from those indicated by
forward-looking statements in news releases, and other communications, including
oral statements, such as references to future profitability, made from time to
time by representatives of the Company. Specific risks and uncertainties that
could affect the Company's profitability include, but are not limited to,
general economic conditions, sudden and/or sharp declines in steel prices,
adequate funding for infrastructure projects, production delays or problems
encountered at our manufacturing facilities, and the availability of existing
and new piling and rail products. There are also no assurances that the Canadian
Pacific Railway will proceed with the Powder River Basin project and trigger any
contingent payments to L.B. Foster. Matters discussed in such communications are
forward-looking statements that involve risks and uncertainties. Sentences
containing words such as "anticipates," "expects," or "will," generally should
be considered forward-looking statements. More detailed information on these and
additional factors which could affect the Company's operating and financial
results are described in the Company's Forms 10-K, 10-Q and other reports, filed
or to be filed with the Securities and Exchange Commission. The Company urges
all interested parties to read these reports to gain a better understanding of
the many business and other risks that the Company faces. The forward-looking
statements contained in this press release are made only as of the date hereof,
and the Company undertakes no obligation to update or revise these
forward-looking statements, whether as a result of new information, future
events or otherwise.
CONDENSED STATEMENTS OF CONSOLIDATED INCOME
L. B. FOSTER COMPANY AND SUBSIDIARIES
(In Thousands, Except Per Share Amounts)
Three Months Ended Six Months Ended
June 30, June 30,
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2008 2007 2008 2007
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(Unaudited) (Unaudited)
NET SALES $129,833 $148,547 $223,274 $259,213
COSTS AND EXPENSES:
Cost of goods sold 107,948 127,309 185,768 223,785
Selling and administrative
expenses 9,959 9,790 19,325 18,191
Interest expense 488 1,183 1,043 2,405
Gain on sale of DM&E investment - - (2,022) -
Gain on sale of property - - (1,486) -
Interest income (586) (4) (1,401) (5)
Other (income) / expense (135) (342) 16 (599)
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117,674 137,936 201,243 243,777
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INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 12,159 10,611 22,031 15,436
INCOME TAXES 4,502 3,762 8,068 5,495
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INCOME FROM CONTINUING OPERATIONS, NET OF TAX 7,657 6,849 13,963 9,941
DISCONTINUED OPERATIONS:
LOSS FROM DISCONTINUED OPERATIONS - (31) - (19)
INCOME TAX BENEFIT - (12) - (8)
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LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX - (19) - (11)
NET INCOME $7,657 $6,830 $13,963 $9,930
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BASIC EARNINGS PER COMMON SHARE:
FROM CONTINUING OPERATIONS $0.70 $0.65 $1.28 $0.94
FROM DISCONTINUED OPERATIONS 0.00 (0.00) 0.00 (0.00)
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BASIC EARNINGS PER COMMON SHARE $0.70 $0.64 $1.28 $0.94
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DILUTED EARNINGS PER COMMON SHARE:
FROM CONTINUING OPERATIONS $0.69 $0.63 $1.26 $0.91
FROM DISCONTINUED OPERATIONS 0.00 (0.00) 0.00 (0.00)
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DILUTED EARNINGS PER COMMON SHARE $0.69 $0.63 $1.26 $0.91
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AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING - BASIC 10,900 10,593 10,939 10,574
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AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING - DILUTED 11,040 10,926 11,097 10,912
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L. B. Foster Company and Subsidiaries
Consolidated Balance Sheet
(In thousands)
June 30, December 31,
2008 2007
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ASSETS (Unaudited)
CURRENT ASSETS:
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Cash and cash items $107,648 $121,097
Accounts and notes receivable:
Trade 73,402 52,856
Other 463 754
Inventories 105,449 102,447
Current deferred tax assets 3,575 3,615
Other current assets 1,509 1,131
Property held for resale - 2,497
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Total Current Assets 292,046 284,397
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OTHER ASSETS:
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Property, plant & equipment-net 42,874 44,136
Goodwill 350 350
Other intangibles - net 44 50
Deferred tax assets 1,426 1,411
Other non-current assets 398 428
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Total Other Assets 45,092 46,375
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$337,138 $330,772
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
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Current maturities on long-term debt $5,909 $6,191
Accounts payable-trade and other 65,793 53,489
Accrued payroll and employee benefits 5,584 11,490
Current deferred tax liabilities 3,541 3,541
Other accrued liabilities 7,819 8,841
Current liabilities of discontinued operations 200 200
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Total Current Liabilities 88,846 83,752
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LONG-TERM DEBT, TERM LOAN 14,762 16,190
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OTHER LONG-TERM DEBT 10,241 11,866
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DEFERRED TAX LIABILITIES 1,638 1,638
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OTHER LONG-TERM LIABILITIES 5,283 3,500
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STOCKHOLDERS' EQUITY:
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Class A Common stock 110 109
Paid-in capital 47,484 45,147
Retained earnings 183,277 169,314
Treasury stock (13,831) -
Accumulated other comprehensive loss (672) (744)
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Total Stockholders' Equity 216,368 213,826
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$337,138 $330,772
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